Trump won’t bring the paper industry back to Maine

The BDN Editorial Board sort of beat me to the punch here, but their article makes a similar point in a different way, so I’m still posting my take.

Donald Trump won the election on a false hope. He said and promised many things that brought him the support that delivered him the presidency, but there is one promise in particular that I believe tipped him over the edge. It resonates in places like rural Maine. It resonates because voters have been primed for it after years of politicians selling them the same bill of goods.

“Vote for me, and I’ll bring jobs back.”

We had jobs. Now we don’t. What do we do? Bring them back. Easy!

It wasn’t always so stark. Politicians have made general claims saying they’ll create more jobs forever, and they still do, but the newest fad is to say they’ll bring them “back” from somewhere. Donald Trump, Hillary Clinton, Bruce Poliquin, and Emily Cain have all said it, Trump being only the most aggressive. It’s the logical extension of related claims we’ve heard for years during debates over trade deals and jobs programs. Decades were spent arguing over how to keep more jobs from being lost and how to create new ones in their place. But those debates went on too long. In the meantime, factories were shut down, people were laid off, and workers lost their identity. Now people don’t want to hear about how we can create a new economy. They just want their old one back.

But they can’t have it.

Others have done a good job discussing why the methods Trump has proposed for bringing manufacturing jobs back—implementing high tariffs on imports—are unlikely to work. He has floated the imposition of tariffs from anywhere between 20-45%, (Sunday, on Twitter, he said 35%) particularly on China and Mexico, but also across the board. The increase in import costs would be passed on to those buying those products, which is a problem since a huge portion of products sold in this country are imported or are made of imported components. If you’re shopping at Wal-Mart, you’ll be spending 35% more. If you’re a business buying a part for your product, you’ll be spending 35% more. That means consumer spending will go down, business profits will go down, the stock market will go down, and incomes will go down. Of course, the idea is that by making imported products more expensive, it will become profitable to hire people to make the same products in America again. Once they get those jobs, then the economy will be looking golden.

The problem is that those jobs—the key to making the whole idea work—are unlikely to materialize. First, the transition period between the implementation of tariffs and the spinning up of U.S. manufacturing to make up for the expensive imports could set the economy back so far that we are unable to make up what was lost. Second, new factories in the U.S. are likely going to be creating more jobs for robots than people.

There’s a secret about manufacturing in America that few candidates have bothered to acknowledge: we’re making more in this country than we ever have. Manufacturing output (i.e. the amount of stuff we make) has rebounded slightly above the level seen before the Recession, which was the highest on record, and part of that rebound is due to companies moving their operations back from abroad. But—and this is important—manufacturing employment (i.e. the number of Americans working in manufacturing) is almost as low as it’s ever been. That’s because as companies have been moving their factories back here, they have been building production lines that are more automated. We can see the impact in the numbers:

Manufacturing output is in blue; manufacturing employment is in red. Source: FRED Economic Data from the Federal Reserve Bank of St. Louis.

That’s a major problem for anyone promising to bring back manufacturing jobs. They might be able to bring back the manufacturing, but they won’t be able to bring back the jobs.

With already dim prospects for bringing back factory jobs in general, the outlook is even worse for the paper industry. The market for many paper goods in the age of computerization is what economists would call elastic—if the price goes up, people will buy a lot less of it. If new tariffs mean newspaper and printing and writing paper costs 35% more than it used to, then businesses, schools, and anyone else who buys a lot of paper are going to use less of it. For many businesses running on computers, using paper is more of a luxury than a necessity. That may start being true for schools as well. The switch away from paper may happen faster than Maine paper mills can get back up and running after a tariff hike, negating the incentive for companies to restart their operations here. That means not as many jobs as promised.

What makes the “bring jobs back” pipe dream so frustrating is that it is not as if protectionist trade policies are our last hope. There are real things we could be doing to fix our economy. In August, I wrote about the need to harness the economic power of trade to boost the economy in the places most hurt by the decline in manufacturing jobs. I won’t repeat myself too much here, but I think it is key to give laid off workers far more support than the meager Trade Adjustment Assistance program currently offers and that companies doing well should be incentivized to open new operations in areas hurting the most.

We also need to make jobs in the new economy as good as the old. Currently, that is not the case. The service sector is expanding quickly, but many of the jobs pay less, have fewer benefits, and much less prestige than the factory jobs that have been built up as the cornerstone of the American Dream. I’ll write more about this in another post, since I think it’s an important topic, but remember: manufacturing jobs were the worst of the worst when they first came about, and it was only through decades of political and social agitation by unions that built them into the symbol of good work they have become. We likely need another such movement.

But right now, it’s time for politicians to stop campaigning on the empty promise of “bringing jobs back,” and it’s time for voters to stop believing it. We need people to act on plans to fix the economy that reflect the reality of the 21st century.

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About Phoenix McLaughlin

Phoenix McLaughlin works at the National Endowment for Democracy helping to foster political development in Asia. Phoenix lives in Washington, D.C. now, but was born and raised in Norway, Maine. In between, he has studied and/or worked in Colorado, Nepal, India, France, Ethiopia, and Augusta. All opinions expressed on this blog are solely his own and do not represent his current or former employers.

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Phoenix McLaughlin

Phoenix McLaughlin works at the National Endowment for Democracy helping to foster political development in Asia. Phoenix lives in Washington, D.C. now, but was born and raised in Norway, Maine. In between, he has studied and/or worked in Colorado, Nepal, India, France, Ethiopia, and Augusta. All opinions expressed on this blog are solely his own and do not represent his current or former employers.